If you were looking for signs that US trade may be collapsing on itself, a good place to start would be Class 8 truck orders which, as we first documented in early December, have posted sharp y/y declines of late. Now, slowing demand for heavy vehicles is hitting home in North Carolina, where Daimler has laid off more than 2,000 people in the past two months alone.

Tesla gets a much-needed infusion of cash and help building the gorgeous Model S sedan. More importantly, Tesla gains legitimacy as it continues raising funds. Having the company that invented the automobile as a partner makes you much more attractive to investors.

Daimler’s investment buys it a whole lot of battery know-how, something German automakers are short of. And a seat on the board gives Daimler gets a close look at Tesla’s business plan and financials so it can decide if it wants a bigger piece of the action.

Car sales in the US collapse:

November Auto Sales: Daimler AG’s sales decline (Source: Forbes):
Total sales at Daimler’s U.S. operations fell 29.9 percent to 15,991 from 22,819 in November 2007Sales of Mercedes-Benz brand vehicles last month declined 38.2 percent to 14,102 while the company sold 1,889 of its two-seater Smart models. Smart was introduced to the North American market in mid-January of this year.
Mercedes-Benz USA said its best-selling model family, the C-Class, had a 36.1 percent drop-off in sales, and E-Class sales fell by 49.3 percent.

Berlin under fire as German car sales collapse

German car sales have plunged to the lowest level since reunification almost twenty years ago, increasing pressure on Chancellor Angela Merkel to abandon budget restraint and back plans for an EU-wide rescue package.

Registrations fell 18pc in November, led by a drop of 36pc in Opel sales. “The crisis has again worsened dramatically,” said Volker Lange, of the VDIK motor vehicle association.

Volkswagen is to suspend production at its Wolfsburg headquarters this month. BMW has cut output in Leipsig to one day a week and Porsche is shuttering its Stuttgart plant for a week. It is just as bad in France where PSA Peugeot Citroen is halting production for a month at Sochaux, the country’s biggest industrial site.

The slump in Germany’s core industry has led to vocal criticism of the Left-Right coalition government. The Handelsbatt newspaper warned this week that the coalition faces a “rebellion” unless it faces up to the gravity of the crisis.

As Detroit’s crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs.

Chrysler owes the bonuses under its contracts with about 50 executives, based on a retention incentive plan crafted early last year by former German parent DaimlerChrysler, when it was preparing to sell the Chrysler unit.

Nancy Rae, Chrysler executive vice president for human resources and communications, said the move made sense at the time to ensure potential buyers that key Chrysler executives would remain in place after a sale. She acknowledged that the bonuses could be seen as controversial now.

*Daimler halts output at two plants four weeks-works council *Daimler shares fall more than 10 percent

(Rewrites with works council and plant spokeswomen)

FRANKFURT, Oct 27 (Reuters) – German carmaker Daimler (DAIGn.DE: Quote, Profile, Research, Stock Buzz) will stop year-end production at two big German plants for four weeks, doubling the normal holiday stoppages given a sharp drop in demand, its works council said on Monday.

The Sindelfingen plant near Stuttgart that makes Mercedes-Benz C-, E- and S-Class models will shut down from Dec. 12 and reopen on Jan. 12, a works council spokeswoman said.

The Untertuerkheim motor and transmission plant will also halt most output from Dec. 15 to Jan. 12, a plant spokeswoman said.

Mercedes-Benz was not immediately available for comment.

On Sunday, Germany’s Frankfurter Allgemeine Sonntagszeitung said the carmaker had imposed a five-week Christmas break for its 36,000 workers at Sindelfingen. Workers normally get only two to three weeks off during the holiday season.